section 19(3) reportOverview

Section 19 of the FAIS Act states that financial statements must be submitted by all Authorised Financial Service Providers to the registrar, not later than four months after the end of the provider’s financial year end. If your business’ financial year end is 28 February, this deadline is 30 June 2018.

Categories of FSP’ and type of financial statements to be submitted

In terms of section 19, all financial statements must be audited. The Registrar however exempted certain providers from the audit requirements. The following type financial statements must be submitted:

  • Category II, IIA, III and IV Financial Service Providers – audited financial statements
  • Category I Financial Service Providers
  • Companies – audited financial statements
  • Sole proprietors and close corporations that do not receive client funds or premiums – unaudited financial statements
  • Sole proprietors and close corporations that do receive client funds or premiums – audited financial statements.
Section 19 of the Act

Section 19 of the Act generally requires a provider to maintain full and proper accounting records on a continual basis; which records must be brought up to date monthly. A provider must prepare annual financial statements prepared in a manner appropriate to the business of the provider, in accordance with a relevant financial reporting framework, reflecting the financial position of the business as at the last day of its financial year and must cause the financial statements prepared to be audited and reported on by an external auditor. This audit report, in the event of the Financial Service Provider not holding money or assets on behalf of its clients, is generally known as a section 19(2)(a) report.

Section 19(3) Report

Section 19(3) of the Act requires providers who hold money and or assets on behalf of their clients to maintain full and proper accounting records on a continual basis in respect of such assets and monies and to cause the assets and monies held on behalf of clients to be audited by an auditor. The limited assurance report, widely known as the Section 19(3) Report, referred to above, must be submitted to the registrar within four months after the year-end of the provider.

Non-submission of financial statements and relevant report

In terms of section 41(2) of the FAIS Act, a Financial Service Provider who fails to submit its financial statements within the period prescribed or any extension thereof is liable to pay a penalty for every day during which the failure continues.

  1. The Registrar will impose a penalty up to R1000 per day from the day on which the financial statements become due until the date on which it is received by the Registrar
  2. Financial Service Providers must therefore submit their financial statements within four months after their financial year-end or such longer period granted in terms of an extension to avoid the imposition of a penalty under section 41(2) of the FAIS Act.
  3. In addition, the non-submission of financial statements and/or the non-payment of penalties may result in the suspension of a Financial Service Provider’s license.

Please contact us, that we can help you to audit and submit your financial statements and relevant Section 19(3) report in time to meet this deadline.

This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

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